The Easter weekend is almost upon us. As you start to unwind and begin to enjoy the long weekend you might be pleased to note gold’s performance this week. At the time of writing gold has posted near double-digit gains during a busy day of US economic data releases.
This is an important day from a technical point of view, given it is the final day of trading this week, month and quarter. Gold’s performance comes despite data releases that indicate the US economy is faring better than expected.
In times gone by one would have reasonably expected gold to falter at the merest hint of stronger-than-predicted data. But we are now seeing a sort of teenager-esque response from gold when it comes to events that one might have previously expected to see a reaction to. It seems to shrug it's shoulders as if to say ‘yeah? And?’.
It goes to show that something we have long waited for is perhaps starting to come to light…physical and non-speculative demand for gold is beginning to bear a heavier weight on price action than it has previously.
This has been coming for a while. After all, ETF outflows have been on a tear for the past nine months, but this has had little impact on the price of gold.
Much of this we can attribute to central bank buying especially by China. Conversations with our fellow LBMA members in recent days have confirmed our suspicions that physical gold is being snapped up by the big investors in the East.
Of course, as I mentioned last week, we fully expect central bank demand for gold to continue, and grow. Given the decision by the EU last Thursday to propose the use of frozen Russian Central Bank assets to support Ukraine, this will have surely fired a spark amongst central bankers that they need to secure their assets in ways that cannot result in similar outcomes.
Gold is the only answer.
And why is it the only answer you might ask? Well let us explain. In this short 4 minute video we explain why gold has maintained its status over thousands of years, as the money of choice. We ask why, of all the metals that can be taken out of the ground, is gold the one that has prevailed as the ultimate currency.
And just before I go, please note our Easter trading hours. We are closed tomorrow (Friday 29th March) and will reopen on Monday 1st April at 8am.
Have a very happy Easter,
Dave
